[ET Net News Agency, 2 December 2020] Huatai Research raised its target price for Air
China (00753) to HK$8 from HK$7.4 and maintained its "buy" rating.
The research house expects airline earnings to recover in 2021, on (1) a gradual
recovery in domestic air travel; (2) COVID-19 vaccine R&D, a potential driver for
international demand, which should ease domestic flight supply pressure and lift fares;
and (3) limited fuel cost hikes and a strengthening RMB, which would enhance the bottom
line.
Huatai likes Air China for (1) its high proportion of international revenue and European
and US routes (to result in increased earnings elasticity); (2) its stake in Cathay
Pacific (00293) which should benefit from vaccine R&D and a rebound in international
demand; and (3) an accelerated Daxing airport diversion effect, which should ease
competition for Air China's slots at Beijing Capital International Airport (00694). (KL)